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Jamie Dupree

The Squeeze Is On

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Jamie Dupree
@ December 18, 2008 12:00 AM
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I was wondering how long it would take U.S. automakers to start taking some drastic moves to save their companies, after talking for weeks about how bad their financial outlook was.

We may finally be seeing some of those near desperate moves.

Chrysler - which said it needed $7 billion this month to avoid bankruptcy - is now going to close down every one of its North American manufacturing plants for at least a month.

In all, 30 plants in the US, Canada and Mexico will shut down on Friday, with no plans to re-open those lines until at least January 19.

Think about that. They are shutting down for a month. That means they aren't worried about running short on cars and trucks during that time frame, because not many people are buying them.

(For those of you wondering, the workers at those plants will still get most of their pay and benefits under the current union contract, even though they won't be at work. But that's another story and another argument for a different day.)

As one headline I saw yesterday said, "Is Chrysler Shutting Down For a Month, or Forever?"

At Ford, which is the best shape of the Big Three, there will evidently be a three week down period, up from the usual two week holiday slowdown.

Ford plans to reduce its production of vehicles in the first quarter of 2009 by almost 40 percent, another move that shows the dramatic drop in consumer demand.

General Motors meanwhile is stopping work on a new plant in Michigan that was going to produce the engines for the Chevy Volt, the plug-in/electric/hybrid that was supposedly part of its future.

Let's just say with oil dropping more every day, and gasoline getting cheaper, not many people are swarming car dealers looking for small, fuel efficient cars.

GM last week made clear that many of the company's plants in the US will be idle for much of January as well.

So what does this mean for the auto bailout being considered by the Bush Administration? Something tells me the White House isn't faking when it talks about "concessions" from all sides, meaning the carmakers, the unions and those who hold the debt of Chrysler and GM.

In the end, it may take more than just a one-month "holiday" for workers to right the ship at those two companies.



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What others are saying

  • The big three
    If my boss asked me why sales were down and I answered "the economy", I would be fired on the spot. The failure of any business in mis-management, period. All good businesses adjust to economic fluctuations.
  • Bankruptcy?
    I guess Chrysler was lying about going bankrupt. If they are shutting down the production lines for a while, then this proves they have a plan it place to avoid going into receivership. This being the case, it blows away their whole argument for a bailout. Same logic goes for GM.

    In the end, they do need to go bankrupt to reorganize -- and the US Government needs to stay out of the process.
  • It still amazes me that GM still doesn't get it. How long is it going to take them to get their head out of their ass. All they need to do is to shut down all the lines that duplicate the same platform but in different badges. Who even drives a Buick anymore
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